Hundreds of thousands of people who claim Universal Credit will miss out on Cost of Living Payments according to new research from a think tank.
The Institute for Fiscal Studies (IFS) said many people on benefits will be worse off until 2025 due a failure in payments keeping up with inflation. IFS added the annual uprating of benefits in April will "merely take them back to around the real level they were at a year earlier".
Many people could be better off if they earned less due to the way the Government's cost-of-living payments will work, the organisation said, adding that more money is being spent overall than if benefits had been raised in line with inflation.
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Real benefit rates were 7.6% lower in 2022 compared with their pre-pandemic levels in 2019, and will be 6.2% lower in 2023 and 2.0% lower in 2024, the IFS said. Its report on Wednesday said: "Astonishingly, it is not until April 2025 that benefit rates are set to recover the ground they lost over the autumn and winter of 2021 due to lags in uprating them with inflation."
The think tank also said government Cost of Living payments are "crudely targeted" and warned they will "create 'cliff edges' in the system".
The report stated: "Receipt of each of the three £300 instalments of the payment will be contingent on having been a Universal Credit recipient in a specific prior month. "We estimate that, as a result, in each of the three relevant months there will be around 825,000 people who earn slightly more than is consistent with Universal Credit eligibility and who, as a result of missing out on the cost-of-living payment, end up with less income than other similar people who earn less.
"Equivalently, they could increase their own income were their earnings to be slightly lower."
A Department for Work and Pensions (DWP) spokesperson said: "This year we are increasing benefits and the state pension in line with September's inflation rate of 10.1%, but we recognise the pressures of the rising cost of living, which is why we also delivered £1,200 of direct, targeted support to millions of vulnerable households last year, and will be providing a further £1,350 of support in 2023-24.
"In addition, our Household Support Fund continues to help people with essential costs."
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